Expenses repaid to volunteers working for your organisation are not taxed. You tax payments you make to your volunteers for their services using PAYE or as a schedular payment.
Sometimes you need to pay back the money volunteers spend doing their work for the organisation. This could be money they spend doing the work itself or travel to or from the work.
There is no tax to pay on the money you pay back to volunteers for expenses. These reimbursements are tax-exempt income if they are either:
- actual expenses
- a reasonable estimate of the likely cost.
You will need a reasonable estimate of the likely cost when:
- you've reimbursed for the expense before the work
- you do not know the actual expenditure but you can make a reasonable estimate of the likely cost.
Taxing payments for services (honoraria)
Payments to someone for doing work which is not a normally part of their job, for example giving talks, are honoraria.
When you pay honoraria to:
- employees, use our PAYE calculator to work out the amount of tax
- someone who is not an employee, it is a schedular payment and is taxed at a flat rate.
Employers and employees can work out how much PAYE should be withheld from wages.Go to this tool
Part-reimbursement and part-honoraria payments
You can make a payment for part-honoraria and part-reimbursement of expenses. Your record should show and be clear about the portions. Then only the honoraria is taxable and the reimbursement will be tax-exempt income.
If it is not clear, the whole payment is honoraria and taxed as a schedular payment.
Payments to school trustees attending board meetings
The first part of any honoraria paid to school trustees for attending board meetings is a reimbursement of expenditure. It is not subject to schedular payments and is different for chairperson and board member:
|Role||Part of honoraria that is a reimbursement of expenditure||Total allowed for the year|
|Chairperson||$75 per board meeting||$825|
|Board member||$55 per board meeting||$605|
If you reimburse a board member more than their normal honoraria payment, lower the honoraria reimbursement by the amount of additional reimbursement you give them.